EURUSD R 2: 1.2250 R 1: 1.2025 CURRENT: 1.1935 S 1: 1.1780 S 2: 1.1640
USDJPY R 2: 95.00 R 1: 93.70 CURRENT: 91.40 S 1: 89.00 S 2: 88.00
GBPUSD R 2: 1.4725 R 1: 1.4550 CURRENT: 1.4410 S 1: 1.4320 S 2: 1.4140
AUDUSD R 2: 0.8575 R 1: 0.8380 CURRENT: 0.8197 S 1: 0.8060 S 2: 0.7960
The USDJPY traded at 91.42 as Asian stocks fell, spurring demand for safer assets. The MSCI Asia Pacific Index declined 0.5% to 109.74, Nikkei 225 slumped 1% and S&P 500 Index futures fell 0.4%. Japanese machinery orders climbed more than estimate 4% (exp. 1.7%), a second straight increase, signaling companies are preparing to spend again as the economy recovers and earnings rebound. From a year earlier, orders rose 9.4%, the biggest increase in 22 months showing signs of picking up, after last month noting they have stopped falling. Higher spending at home would broaden a recovery that's been driven by exports and hampered by deflation. While exports have been driving Japan's growth, investors are concerned that the European sovereign debt crisis will undermine demand from abroad, particularly as the JPY climbs. Fed's Hoenig said the US is in a sustained recovery and the Fed should begin to normalize policy, with rates near zero unsustainable. Hoenig repeated that the funds rate should be raised to 1% by the end of September adding that the Fed's pledge to keep its main rate low for an extended period limits its flexibility to begin raising rates modestly.The NZDUSD traded at 0.6618 as RBNZ Governor Alan Bollard will probably raise the cash rate from a record low 2.5% to 2.75% tomorrow. The AUDUSD fell 0.6% to 0.8229 as reports showed Australian consumer confidence slid 5.7% to 101.9 for a third straight month after the RBA boosted borrowing costs six times since October and global financial markets were roiled by Europe's debt crisis and home-loan approvals fell. Today's report adds to evidence that waning consumer and business sentiment may cool economic growth this year in Australia, which skirted last year's global recession. RBA Governor Glenn Stevens said on June 1 that monetary policy is appropriate for the near term, after boosting the rate by 150 basis points between October and last month to 4.5%. Sentiment may rebound tomorrow when the latest unemployment figures are published showing 20,000 jobs were probably created in May. HSBC dropped its forecast for the Aussie to reach parity by year-end, citing a bumpy and volatile ride ahead for the currency because of the risk China's property bubble may deflate and the potential for contagion to affect Australian banks. Consumer prices in China probably jumped 3% (prev. 2.8%), hitting the government's targeted full-year ceiling, according to a report due June 11.
The EURUSD declined to 1.1950 after falling to as low as 1.1877 on June 7, the weakest since March 2006 while EURJPY traded at 109.26 on speculation US policy makers will reiterate that an economic recovery is gaining pace and as economists forecast the ECB, which meets tomorrow, will leave its key interest rate at a record low until next year. Fed Chairman Bernanke testifies before a House Budget Committee today after saying June 7 that the Fed will raise rates before the economy returns to full employment. Global investors have little confidence in Europe's efforts to contain its crisis or in Trichet, with 73% calling a default by Greece likely. Only 23% say they expect the EU's almost $1 trillion rescue package to both keep the EUR together and prevent a debt default by a government while more than 40% say Greece is likely to abandon the EUR. The EUR yesterday gained on speculation the SNB intervened in the market to weaken the CHF after it touched a record high versus EUR. The EURCHF briefly climbed to 1.3910 after losing 0.9% to 1.3746, a record and later traded at 1.3796.
GBPUSD declined 0.2% to 1.4439 and GBPJPY declined 0.3% to 131.99 after Fitch said yesterday the UK's fiscal challenge is formidable suggesting British PM David Cameron will need to speed up budget-deficit cuts to protect the UK's top credit rating. Treasury estimates show government debt-interest costs reaching 70 billion GBP in five years, up from 31 billion GBP in the last fiscal year.